Aparthotels in Japan Draw Foreign Tourists and Investors

The Rise of Apartment Hotels in Japan

Apartment hotels, which are equipped with in-room kitchens and home appliances, are becoming increasingly popular in Japan. This trend is driven by the growing demand from foreign tourists who prefer home-like environments during their stays. As a result, this new accommodation model is creating fresh business opportunities for construction and real estate companies.

These apartment hotels are particularly well-suited for families and groups of close friends traveling on medium- or long-stay trips. Unlike traditional business hotels, they do not have restaurants or other common facilities, which reduces the need for front desk services and linen replacement. This makes them more efficient to operate over extended periods.

One of the key advantages of apartment hotels is that they can be built on small plots of land. This flexibility has made them a viable option for redeveloping aging small- and mid-sized office buildings. By repurposing existing structures, developers can meet the growing demand for alternative accommodations without requiring large amounts of new space.

Pioneers in the Market

Cosmos Initia Co., a real estate firm recognized as one of the pioneers in the apartment hotel sector in Japan, launched its Mimaru brand in 2018. The company currently operates 27 facilities across major tourist cities such as Tokyo, Osaka, and Kyoto. These hotels feature units starting at around 40 square meters, capable of accommodating between four and 10 guests.

According to the company, 95% of its visitors are foreign nationals, with many staying for approximately four nights. The average rate for rooms that accommodate four guests is around 55,000 yen ($360) per room, a significant increase from the 30,000 to 40,000 yen range before the coronavirus pandemic.

Masami Akashi, who oversees Mimaru operations, noted that while the rise in room rates has eased, the supply of hotels that can accommodate large groups in urban areas has not kept up with demand.

New Entrants and Expansion Plans

Nippon Steel Kowa Real Estate Co. recently entered the market with its &Here brand in March 2024. The company opened its third facility in the Shinjuku district of Tokyo late last month and plans to expand further. It aims to launch properties in the Asakusa district of Tokyo, a popular tourist destination, as well as in Fukuoka, located in Kyushu.

Another major player in the real estate sector, Daito Trust Construction Co., also has plans to open apartment hotels in Tokyo and Fukuoka by 2027. This expansion reflects the growing confidence in the long-term viability of this accommodation model.

Tourism Trends and Implications

According to the Japan National Tourism Organization, the average length of stay among foreign tourists in the country was 5.9 days in 2024. This data highlights the increasing interest in longer stays, which aligns with the features offered by apartment hotels. Their ability to provide more space, privacy, and kitchen facilities makes them an attractive option for travelers looking to extend their visits.

As the demand for alternative accommodations continues to grow, apartment hotels are likely to play an even greater role in Japan's tourism landscape. Their flexibility, cost-effectiveness, and appeal to international travelers make them a promising segment for future development.